German Stocks Retreat; Deutsche Bank, HeidelbergCement, ThyssenKrupp Drop
German stocks fell the most in six weeks after the Federal Reserve said growth in the U.S. economy is likely to be “more modest” than it had forecast, while government data suggested a slowdown in China is deepening.
Deutsche Bank AG, Germany’s biggest bank, and HeidelbergCement AG, the world’s largest maker of aggregates used to produce concrete and asphalt, led the losses. Rheinmetall AG slid 3.3 percent after predicting operating profit that fell short of some analysts’ estimates.
The DAX Index dropped 2.1 percent to 6,154.07 at the 5:30 p.m. close in Frankfurt, extending yesterday’s 1 percent decline and recording the biggest drop since June 29. The measure is still up 8.5 percent since May 25. The broader HDAX Index fell 2.2 percent today.
The Fed yesterday reversed its plans to exit from aggressive monetary stimulus and decided to keep its bond holdings level to support an economic recovery it described as weaker than predicted. The pace of the rebound in output and employment has slowed in recent months, the central bank said in a statement released yesterday after European markets closed.
“A week in politics is a long time, but how about 10 days in economics?” Jonathan Plant, a strategist at Liberum Capital in London said. “This is an interesting turnaround in Fed rhetoric. The data has been deteriorating, even if it still feels like a protracted slowdown as opposed to a double dip.”
‘Way to Go’
Fed Chairman Ben S. Bernanke said Aug. 2 that while the U.S. has “a considerable way to go” for a full recovery, “rising demand from households and businesses should help sustain growth.” The U.S. central bankers yesterday set a $2.05 trillion floor for their securities portfolio, pledging to reinvest the proceeds of maturing mortgage-backed securities in long-dated Treasuries.
Separately, China’s industrial output rose the least in 11 months and retail sales growth eased, reports showed today. Industrial production climbed 13.4 percent from a year earlier, the country’s statistics bureau said. The releases added to signs that the world’s third-biggest economy is slowing.
Deutsche Bank lost 3 percent to 53.65 euros, as a gauge of European banking shares fell 3.4 percent. HeidelbergCement retreated 4.2 percent to 35.7 euros. ThyssenKrupp AG, Germany’s largest steelmaker, dropped 4.2 percent to 22.81 euros as aluminum, copper, lead and tin slid in London trading.
Rheinmetall, a German supplier of machine parts and weapons, declined 3.3 percent to 45.73 euros.
The Dusseldorf-based company raised its forecast for earnings before interest and tax to as much as 280 million euros ($365 million) from a range of 220 million euros to 250 million euros previously. Stephan Klepp, an analyst at Berenberg Bank in London, had estimated operating profit of 292 million euros for 2010, according to data compiled by Bloomberg.
Today’s losses may be short-lived, according to Ralph Acampora, a New York-based analyst who’s used charts to predict market moves since the 1960s. The DAX this month breached a resistance level near 6,340 that may spur further gains, he said in an interview.
When the index advanced in April and June, it failed to pass that level. Each time the DAX declined between May and July, it fell to a higher low as buyers piled back in, forming a “classic ascending triangle,” the analyst said.
The following stocks also rose or fell in Germany. Stock symbols are in parentheses:
Freenet AG (FNTN GY) jumped 3.7 percent to 8.28 euros, the best performance in the HDAX. Germany’s fourth-largest mobile- phone operator said second-quarter net income rose to 23.6 million euros from 9.4 million euros a year earlier.
Kloeckner & Co. SE (KCO GY), a metals trader, fell 5.9 percent to 16.06 euros, its biggest retreat since May 25. The company raised its full-year guidance to a level that Berenberg Bank analyst Alexandra Roche called “cautious.”
Phoenix Solar AG (PS4 GY) tumbled 8.4 percent to 30.22 euros, the largest loss since October. The maker of solar plants said it expects a weaker third quarter after reporting record net income in the second quarter of 15.9 million euros.